A huge relief would have been felt by many who are in desperate need of cash after the revised decision by the Employees Provident Fund (EPF) to allow a more flexible withdrawal from Account 1 for those who are severely affected by the unprecedented crisis. But it should not be made an extended solution, hence, the need for sustainable adequate measures.

To recap, during the tabling of Budget 2021, some EPF-related measures which are intended to support rakyat in short term are as follows:

• Reduction in employee contribution rate from 11% to 9% beginning January 2021;

• Targeted withdrawal from Account 1 – RM500 a month with a total up to RM6,000 over 12 months for members who have lost their jobs; and

• Withdrawal from Account 2 for the purchase of insurance and takaful products.

Withdrawals from Account 2 were already allowed in April via i-Lestari which allows contributors to take out RM500 per month for 12 months with a total of up to RM6,000.

This mechanism was said to have benefited 4.7 million members with a total withdrawal value of RM11.6 billion.

Mixed reactions received from the public regarding the limited coverage of Account 1 withdrawal in Budget 2021 had resulted in a revision by EPF with an expanded coverage to those who have lost their jobs, given unpaid leave and have no source of income, announced on 16 November known as i-Sinar facility.

A greater number of members will benefit under the revised facility – from 600,000 to 2 million and the total value of withdrawal rising from RM4 billion to RM14 billion.

As much as these actions reflect the “Economics of Empathy” coined by EMIR Research for the sake of helping the vulnerable rakyat, each of us also needs to be mindful of what’s ahead especially when uncertainties remain and ageing population is also growing (10.3% in 2019).

The latest available statistics from EPF show that around 54% of its members aged 54 and above have savings less than RM50,000 while only 34% of them have reached the level of Basic Savings of RM240,000 by the age of 55.

Reported by Edge Markets, EPF also conducted a Covid-19 impact survey in July on 21,665 members working in both formal and informal sectors, involving more than half coming from B40 households.

Findings from the survey showed that their main long-term concerns are income stability (66%), health (53%) and retirement savings (51%).

These findings are broadly in line with our poll findings for 3Q20 dominated by respondents from low-income households (65.6% earning RM3,000 and below) by which it is discovered that job losses, inadequate incomes and quality of healthcare are respondents’ main concerns – worry levels at 85%, 80% and 75% accordingly.

As much as these actions reflect the “Economics of Empathy” coined by EMIR Research for the sake of helping the vulnerable rakyat, each of us also needs to be mindful of what’s ahead especially when uncertainties remain and ageing population is also growing. File image

As much as it is important to provide a fast-track cash to the people, their savings should not be made an easy or a-must option so long as the crisis continues because the savings came from rakyats’ hard work and it must have taken years to do it.

According to Prime Minister Tan Sri Muhyiddin Yassin in an interview with television stations prior to the budget, the first round of reduction in EPF contribution rate (11% to 7%) had already led to 70% of members opting for it – another channel of bringing down savings.

Given the poor social safety net that plenty of Malaysians have especially the B40 households and informal sector workers, measures to safeguard people’s savings also need to be considered.

Instead of workers needing to draw down their hard-earned savings, more sustainable and sufficient measures should be thought of by the more powerful stakeholders, i.e. propping up workers’ wages and create jobs which match the industrial demand to mitigate longstanding issue of unemployment and underemployment.

Increasing wages has become increasingly important after the upward revision of national poverty line income (PLI) to RM2,208 as it implies that households living with incomes below RM2,208 are in absolute poverty – a situation in which household income is not enough to meet the basic needs of food, shelter and clothing.

Besides that, it is positive to see that EPF has come up with one measure in terms of advisory for its members through EPF’s Retirement Advisory Services (RAS) and/or the Credit Counselling and Debt Management Agency (AKPK).

It is indeed very crucial to get a second opinion from the involved and experienced body as retirement savings withdrawals should be performed wisely with sufficient financial literacy and members need to be made known of any other suitable options.

Yes, unprecedented times do require unprecedented actions given a lot of people are still suffering from the hard impact of crisis. But a long-term and feasible perspective is critically needed, thus, sacrificing Malaysians’ savings shouldn’t be made too long.



Sofea Azahar is Research Analyst at EMIR Research, a think tank focused on strategic policy recommendations based on rigorous research.

** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.